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Free Trade Without the US

How should Latin America respond to US President Donald Trump’s America-first approach to the global economy? Here’s one possible answer: build a free-trade area of the Americas – and leave the US out of it.

SANTIAGO – How should Latin America respond to US President Donald Trump’s America-first approach to the global economy? Here’s one possible answer: build a free-trade area of the Americas without the United States.

Of course, the idea is far from new. The founding fathers of Latin America’s republics talked about it two centuries ago. But it never came to pass.

In the 1960s, there was much discussion about Latin American integration. Summit meetings were held and agreements signed. But little progress on free trade followed. For most countries in the region, Europe or the US remained larger trading partners than their immediate neighbors.

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Andrés Velasco, a former presidential candidate and finance minister of Chile, is the author of numerous books and papers on international economics and development. He has served on the faculty at Harvard, Columbia, and New York Universities.

We must do anything we can to stop feeding China. Follow the money and the United States huge trade deficit with Mexico becomes even more disturbing as you begin to understand where the money eventually ends up. When you start thinking about all the money and jobs we shift into Mexico each year you would think by now Mexico would be rolling in cash.

A bit of research quickly confirms that the money Mexico receives by way of trading with America quickly passes through its lands and flows to Asia. It could be argued that when all is said and done we are still transferring our wealth to the far east only by the scenic route. More on the problem with this in the article below.

Andrés Velasco describes the upbeat mood in Latin America - free trade without the US. He says, in the past Washington was more of a spoiler than a facilitator. Now thanks to Trump’s "nationalist and protectionist bullying," the time for "free trade across much of the Americas" may finally have come, fulfilling part of Simon Bolivar's dream.
Bolivar, South America's independence hero and liberator, battled his way to fame and led in early 19th Century a revolutionary war against Spain, gaining independence for his country, Venezuela and several present-day nations - Colombia, Ecuador, Panama, Peru and Bolivia (his namesake). He had dreamed of a united Latin America, a dream not shared by the countries he ruled, and they seceded one by one from Greater Colombia. His fledgling idea of pan-American unity became reality in 1948 when the Organisation of American States (OAS) came into being.
Despite efforts, integration in the 1960s yielded "little progress on free trade," because countries in the region were more keen on doing business with Europe and the US rather than with their neighbours. In the early 1990s, George H.W. Bush "north-south agreement" of a free-trade area from Alaska to Tierra del Fuego "did not materialize," due to factors that blocked regional free trade.
Over a decade ago a bunch of left-wing populists rose to power, who were vocal critics of "capitalism, globalisation and neoliberalism." Leaders rejected any agreement with the US, seeing "free trade as a dirty 'neoliberal' phrase." Today populism in the region is "in retreat." Gone are Argentina's Cristina Fernández de Kirchner and Brazil's Dilma Rousseff. Venezuela's Nicolas Maduro faces calls from the opposition for him to resign. In Ecuador, Raffael Correa has to step down after 10 years in power.
Although the "three main stumbling blocks" are gone, it requires much political will and leadership to overcome "policy inertia" and domestic resistance like "protectionist sentiment." As China's growth is slowing, Europe mired in crises, "and the US walling itself in, the region’s growing markets have fresh appeal." While Argentina, Brazil and Mexico all face different challenges, they are "pushing in the same direction." The author suggests Argentina to take advantage of the Mercosur regional trade agreement with Brazil, Paraguay, and Uruguay and incorporate them into "a larger free-trade area." If Chile would "bring together the more liberal economies" of the "Pacific Alliance, which already binds together Mexico, Colombia, Chile, and Peru with the more protectionist regimes of the Atlantic," Canada would make a perfect complement.
Much has to be done to rein in protectionism and to eunsure common standards that protect "labor and environmental practice" as well as "issues of investment and intellectual property." Indeed, Latin America benefits from the US absence, because "some of the more controversial rules that North American businesses have lobbied for could now be excluded." A pan-American unity will show that a continent can forge a strong trade union without member states compromising their own national sovereignty. Many believe Brexit and the EU could serve as a lesson.

OK, now we blame the US for LATAM elites' inability to make deals benefiting their countries and not their families? The truth is, these countries cannot spell Free Trade or Double Tax Treaty, they are really behind the curve.

Is this a distinction without a difference? What is the substantive difference between the US trading with a North American free trading block that it negotiates a trading agreement with and a re-negotiated NAFTA agreement?

I'm all in favour of increased trade via trade agreements between the Americas, sans-United States if necessary.

Aside from Canada and Mexico within the NAFTA context, other trade agreements already exist, especially between Chile, Costa Rica and Canada and South and Central American nations. More members could be invited to existing agreements, or a larger, overarching agreement could occur that would benefit all participating nations.

It could become a gift for Canada and Mexico to dramatically ramp-up trade with Central and South American nations -- without U.S. involvement. And truth be told, the U.S. seems to be looking inwards at present, and isn't interested in new international trade agreements.

Perhaps if these agreements are worthy and successful, a future U.S. administration will decide to join a fully-functioning and thriving trade zone. And that would be a happy day.

But until that day, getting such trade accord organized and passed into law should be the first and top priority for Canada, Mexico, and every Central and South American nation.

It would be deliciously ironic if the United States, four years from know, found itself on the outside looking in on free trade agreements organized by China in the Pacific and Mexico (?) in Latin America -- both created while the Republicans (of all people!) controlled the White House, Senate and House of Representatives here in the U.S..